Why being demand driven matters more than ever
In today’s tough economic times, the center of attention for many companies has shifted to the integration of marketing strategies and programs to supply chain planning, management and optimization. The ROI attained by these management teams working together is directly proportional to how well the teams are synchronizing their plans to create a customer-driven supply chain.
The Perfect Order Index (POI) captures the effects of collaboration on supply chain execution and fulfillment. There are four metrics that comprise the POI: on-time delivery percentage, percentage of orders shipped complete, damage free order percentage, and accurate invoicing. At first glance these may seem to only be relevant within supply chains. However, all forms of demand generation strategies affect these measures. The initial market direction and expectations created by a company through its marketing define the minimum level of performance of each of these measures.
Just take Apple for example. When they launched the iPhone, customers had very high expectations of the new product. This perception of perfect order performance affects the calculation of the POI. Having demand generation as an integral part of supply chain planning was critical for Apple’s launch.
Demand generation, supply chain performance, fulfillment and customers’ expectation are all interlinked. With technology today, it is possible to overlap POI data on a per product basis to customers’ attitudinal scores to create a barometer of how effectively a company is meeting or exceeding their customers’ expectations. By “mashing-up” structured financial data with attitudinal data gathered through surveys and comments, companies can create a trend line to see the effects of bringing supply chain planning, management, and fulfillment into the new product development and introduction process over time.
Given the current economic uncertainty, many companies are cutting back on investments to reduce costs. If you cost-reduce any series of systems and processes long enough there will be a positive ROI. But, there is far greater value in synchronizing the supply chain and demand generation to exceed customers’ expectations through exceptional performance. Rather than focus on saving money by not connecting these processes, the concern needs to be how to bring in even more money using demand generation and fueling new business growth.
Product introductions, product line extensions, or launching a new service are all events companies have used to rationalize investments in becoming demand-driven. Use any of these as a pilot project that will quickly show the positive impact of making supply chain planning and management more demand-driven.
The perfect order isn’t just for supply chains anymore. When considering the impact it has on customer expectations and its utility as a barometer of how well a company is fulfilling those expectations, it forces the issue of how demand-driven a supply chain really is. It is important fulfill orders accurately, completely, on time and with no damage. Don’t risk not doing these things well in order to reduce costs for a higher ROI.
Even in a troubled economy, investing in becoming demand-driven has the potential of bringing in top-line revenue growth and permanently changing a company’s ability to compete for new business.